More than half (58 percent) of 2012 California home sellers claimed affordability problems such as could not afford the mortgage, moved to a less expensive market, and loss of household income as their primary reason for selling. Other reasons mentioned were job and income uncertainty (by 17 percent of sellers) and being underwater (by seven percent). Owners’ reasons for selling reflect the hardships that most are experiencing in coping with a difficult global economic climate.

Another indication of sellers experiencing challenging times is the fact that more than half (53 percent) currently rent their residence, compared to 47 percent who own their current residence. Of those currently renting, more than three-fourths (78 percent) said they do not intend to buy again. While more than half of all sellers are currently renting, this is an improvement from 88 percent of sellers who rented in 2011 and 58 percent who were renters in 2010.

Furthermore, sellers are not very optimistic about future home prices, only about one in five believe that home prices will go up in 10 years. Their outlook is even more pessimistic in the short run, with 12 percent believing prices will rise in five years, and only nine percent believing prices will rise in a year. With 74 percent of sellers having considered strategic default and 79 percent having tapped into their home equity by taking cash out, it’s no surprise that the majority feel uncertain about or have grim expectations for home prices in the future, as Exhibit 1 illustrates.
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[1] Survey responses are skewed more towards short sale transactions than the distribution of distressed properties under current market conditions.